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Shin: SB 11 Is Foolish And Self-Defeating

Submitted by Carol A. Clark

on March 8, 2019 - 7:33am

By LISA SHIN

Los Alamos

Predictably, our Governor signed Senate Bill 11, which would require a nonprofit entity with 501 (c) (3) status with the IRS to pay state gross receipts taxes (GRTs) and specifically targets our National Laboratory. Say what? I am deeply concerned about this issue, because as I have written before, “Our Legislature should advocate for policies that bring more job creators to our state, not drive them away. Susana Martinez was right to veto this onerous and flawed tax policy on the #1 job creator in Northern New Mexico.” TRIAD has a moral obligation to the American Taxpayers, not to Los Alamos County’s bloated government and its pet projects.

I speak as a small business owner whose livelihood depends on our National Laboratory (LANL) and its hiring patterns. I speak for those whose ability to provide for their families and pay their bills depends on LANL and its long-term success. I speak for those who care more about LANL's national security and scientific missions than about government projects that do little to directly improve the lives of citizens. I speak for those who value our National Laboratory, not as a cash cow, but for its unique history, purpose, and scientific missions. I speak for those who urge our Council to prioritize the interests of LANL above all else.

With SB 11, will “new expenditures” include a multi-million dollar REC project, an expanded kiddie pool that citizens voted down in May 2017? In evaluating seven strategic priorities, we must ask: Does the project advance the science, technology, and engineering base of LANL? Does the project reflect the will of taxpaying citizens or the pocketbooks of big contractors? Does the project benefit a few at the expense of many?

It is shortsighted to keep the cost of overhead high at the expense of scientific enterprise and programming. There are far better ways for LANL to contribute directly to our state’s well-being. It can do so through education, apprenticeships, tech transfer, and training programs in Northern New Mexico. The Regional Partnership School is a “new approach to teacher professional development to Northern New Mexico. By helping to support our educators, we also support our students – and we all benefit.”

It is time for Los Alamos’ local government to exercise fiscal responsibility and negotiate a reasonable budget for essential services. Consider Brookhaven National Laboratory: DOE agrees to make annual PILOT payments in lieu of taxes to Brookhaven. These funds are meant to compensate the town for income lost due to the Lab’s tax-exempt status, and are distributed to local school, fire and library districts.

Before the tax windfall, LANL supported an excellent quality of life, world class education, and a safe community for Los Alamos’ residents. That’s because our public schools and fire department received millions in direct federal funding. During the tax windfall, Los Alamos County approved projects that would incur enormous perpetual operating and maintenance costs. Unfortunately, the Council greatly expanded the cost of government instead of paying off debt and investing in revenue producing assets. When there’s a government surplus, “Save for the Lean Years”!

Recall that pit production was recently split between Los Alamos and South Carolina, with the majority of the nation’s production of plutonium cores for nuclear weapons taking place at Savannah River Site. That was a blow to our Congressional delegation, who had been “lobbying fiercely to keep and expand the plutonium work at LANL...” NNSA administrator Lisa Gordon-Hagerty did not wish to rely on a “single production site” for plutonium pits, and aimed to improve “the resiliency, flexibility, and redundancy of our Nuclear Security Enterprise.” She point blank told our County Manager that Triad is required by the Federal Acquisition Regulation to pursue any and all tax savings possible. NNSA will not respond kindly to SB 11! Perhaps more operations could be moved out of New Mexico. There are other states, without an SB 11, who can do this work and need these jobs.

NNSA could simply restructure its activities in order to avoid New Mexico GRTs. With LANL’s new management and tax structure, SB 11 does not necessarily guarantee the same revenue stream as before. SB 11 could be challenged in Federal Court, which could demand that New Mexico’s local and state governments pay back all gross receipts taxes. SB 11 is foolish and self-defeating. But it is one of many bills just like that in the NM Legislative Session of 2019.